UnitedHealth Stock Drops 15% on CEO Departure, Forecast Withdrawal

UnitedHealth Group, a prominent healthcare giant, experienced a significant drop in its stock price, declining approximately 15% during early trading hours on Tuesday. This sharp decline followed the company's announcement that its Chief Executive Officer, Andrew Witty, would be stepping down from his position. Additionally, the company withdrew its earnings forecast for 2025.

The company stated that Witty's departure was due to personal reasons. His successor will be Stephen Hemsley, who previously served as the CEO of UnitedHealth Group from 2006 to 2017 and is currently the Chairman of the Board. This leadership transition comes at a time when UnitedHealth Group is facing multiple operational and industry challenges.

UnitedHealth Group cited the continuous acceleration in demand for medical services and the high cost of healthcare as the primary reasons for withdrawing its full-year performance guidance. The company highlighted that the pressure from new members joining the Medicare Advantage program, a federal health insurance plan, has significantly contributed to these challenges.

Last month, UnitedHealth Group had already reduced its earnings per share forecast from the initial range of $29.50-$30.00 to $24.65-$25.15. This adjustment was based on indications of increased medical service utilization and financial strain on the Medicare Advantage program. Despite these challenges, Hemsley emphasized that the company remains committed to long-term growth and aims to restore its historical annual growth target of 13%-16% in the future.